The Modernization of BSA

We hear a lot in today’s regulatory arena about “modernizing” regulations put in place over 30 years ago to align with today’s society and banking practices. The conversation is mainly focused around modernizing the Bank Secrecy Act (BSA) and the Community Reinvestment Act (CRA). I think we can agree both need some revamping.

H.R. 6068, the Counter Terrorism and Illicit Finance Act, was introduced to the House Financial Services Committee in June of this year. If passed, this will be a step in the right direction towards modernization. Specifically, this bill calls for increases to the Currency Transaction Report (CTR) and Suspicious Activity Report (SAR) filing thresholds.

When CTRs were first introduced, $10,000 was a significant amount of money. Due to inflation, it is estimated that it equals $60,000 in today’s economy. Do not get too excited though! The bill only calls to increase the filing threshold to $30,000. While not aligning entirely with inflation, it will drastically decrease the ‘paper pushing’ that does not necessarily assist law enforcement in catching the true financial criminals. I think we can easily argue SARs are better at that job! Speaking of SARs – the bill also addresses SAR thresholds. It calls for an increase in the reportable threshold from $5,000 to $10,000.

Along with raising the thresholds, the bill addresses a handful of other topics, including streamlining the requirements for CTRs and SARs via a government-facilitated formal review of their requirements and their effectiveness, an 18-month enforcement safe harbor of the CDD rule, and encouraging the use of technological innovations. Many industry associations, lobbying groups, and regulatory agencies are in support of modernization efforts. You can read more on the bill here.

Make your voice heard on these updates – contact your political action committee of choice and take advantage of comment periods.

Jessica Caballero, CRCM, is a former OCC Examiner and currently Senior Manager of Strategy & Evangelism at Banker’s Toolbox, a leading enterprise risk management solution for financial institutions.